Singapore airlines/chiang mai:

Singapore Airlines/Chiang Mai: High Investment Costs

SINGAPORE (Dow Jones)--Singapore Airlines Ltd. (S55.SG) Friday said it couldn't commit the resources needed to set up a new airline based in Chiang Mai, north Thailand.

"The project will demand considerable resources which SIA is not able to commit at the present time because of SIA's other needs," the national carrier said in a statement to the Singapore Exchange.

The idea of a new Chiang Mai-based budget carrier was first discussed by Singapore Prime Minister Goh Chok Tong and his Thai counterpart Thaksin Shinawatra earlier this year.

But there had been worries the proposal may not be viable, as the project requires high investment costs and doesn't offer an attractive return on the investment.

SIA said its feasibility study concluded that the new airline would be viable if certain conditions were met.

"For example, if fuel costs are lower than at present and if the traffic base is developed further," SIA said.

The carrier, which is recovering from a travel slump after the recent SARS outbreak, is meanwhile evaluating whether to launch a Singapore-based no-frills carrier.

SIA has been facing fierce competition from regional budget airlines such as Malaysia's AirAsia Sdn. Bhd.

--Yahoo Singapore 2003-10-10